Leveraging the Seventh Circuit e-Discovery Principles to Contain Litigation Costs

Corporations have had to become more strategic about how they handle litigation, especially during the discovery phase, in order to manage this increasing expense. Properly employing the Seventh Circuit Electronic Discovery Principles (http://1.usa.gov/yVv5L0), even if you're not in that jurisdiction, is one strategy that will help contain litigation costs.

'Meet-and-Confer' Requirement

Rule 37(a)(1) of the Federal Rules of Civil Procedure was added by amendment on July 1, 1970. It required that any motion to compel discovery “must include a certification that the movant has in good faith conferred or attempted to confer with the person or party failing to make disclosure or discovery in an effort to obtain it without court action.” Many states have adopted similar provisions (see, e.g., Ill.Sup.Ct.R. 201(k) (Reasonable Attempt to Resolve Differences Required)). Unfortunately, the so-called “meet-and-confer” rule has proved to be a well-intentioned, yet ill-fated, attempt to reduce the costs and animosity associated with discovery disputes.

The meet-and-confer requirement became more stringent over the last 10 years because of local rules that mandate that the conference be a face-to-face meeting or, at a minimum, via telephone conference (see, e.g., L.R. 37.2, U.S.D.C. N.D.Ill.). In fact, some magistrate judges, typically the individuals assigned to manage discovery in federal cases, have mandated that a letter precede the meet and confer, outlining all the disputes, the reasons the discovery is requested, and the legal basis or bases for turning the data over.

As awareness and use of e-discovery grew, failures in the meet-and-confer process increased in tandem. Parties elected either not to participate fully or at all. The excuse provided for such feigned participation was that the ESI discovery requested was overly broad and/or unduly burdensome. Often, ESI discovery requests were concealed in the discovery request's definition of “documents” or in catch-all verbiage of the requests themselves as counsel cast a wide ESI discovery net.

The truth, however, behind failed meet and confers lies within one or more of the following causes:

• Parties do not have a complete understanding of their responsive ESI universe (types and amount of data);
• Parties approach the meet-and-confer process with insufficient information or authority to resolve ESI discovery disputes;
• Parties lack the proper technology know-how or skills to perform an early assessment of their ESI (forensic collection and review); or
• Parties are de-incentivized to participate transparently in a discovery conference (economic and actual costs).

Because the meet-and-confer process is mandatory, breakdown creates inefficiency and increases litigation costs to parties. The parties also have made no progress in establishing a protocol for ESI discovery. This is a Petri dish for sanctions.

Seventh Circuit e-Discovery Pilot to the Rescue

The federal discovery rules “should be construed and administered to secure the just, speedy, and inexpensive determination of every action and proceeding.” (Fed.R.Civ.P. Rule 1.) Breakdowns in ESI discovery and the spirit of this rule are what, in May 2009, led U.S. District Chief Judge James Holderman of the Northern District of Illinois to form the Seventh Circuit Electronic Discovery Committee. The committee issued its guiding principles in August 2010 and began Phase I of implementation and testing of the program.

Three key components of these principles include: early case assessment and preservation; identification and discovery protocol of ESI; and use of an “e-discovery liaison.” The principles eventually made their way into a proposed standing order, which federal courts in Illinois, Indiana and Wisconsin could elect to adopt or suggest to litigants appearing before them. Many courts have adopted the standing order and/or the principles (see, e.g., Navigators Ins. Co. v. Freight Tec Management Group, Inc., 2011 U.S. Dist. LEXIS 105979 (U.S.D.C. E.D. Wis. Sept. 19, 2011; U.S. Dist. Judge Rudolph T. Randa); see also, Applications of Heraeus Kulzer, et al. v. Biomet, Inc., 633 F.3d 591 (7th Cir. Jan. 24, 2011) (Judge Posner “strongly recommend[ing use of the Seventh Circuit Principles] for any complex discovery proceeding”)).

Early Case Assessment/Preservation

Principle 2.01 suggests that, prior to the initial status conference with the court (Federal Rule 16), the parties should meet and discuss the anticipated ESI discovery they will need in the case. Specific focus should be given to identifying relevant ESI and development of a protocol for locating, preserving and managing costs of ESI discovery. Parties are encouraged to assess their respective clients' data before the meet-and-confer in order to be able to address any issues or discovery disputes that may subsequently arise, such as costs and format. This principle also enables the court to order more conferences, modify the discovery, or issue sanctions if one or more of the parties are not participating in good faith.

The purpose of the early case assessment (ECA) is to avoid waiting until discovery requests are served, which begins the ticking of the 30-day clock to provide responses. A defensible assessment of a party's ESI within that timeframe is nearly impossible for any sizable case. The principle suggests that a party (or counsel) should examine how its ESI is stored and retrieved, as that inquiry will highlight potential discovery issues, such as proprietary software and active databases. This can lead to a fruitful discussion about protective orders or on-site data reviews to protect the confidential information or trade secrets, yet still provide access to the evidence.

The timing of the ECA (before the initial status conference) is also critical. If a party or its counsel has not issued a “litigation hold” prior to that date, the ECA provides an unyielding trigger date for preservation of the data. This avoids potential spoliation of data, which can later result in severe sanctions to party and counsel.

Accurate documentation of the ECA and Rule 16 meet and confer process is vital. It provides a structure for ESI discovery throughout the remainder of the case as well as a valid report to the court. An encouraging trend is the automation of the meet and confer process, including preparation and outcome.

Identification and Protocol

If the parties have conducted a suitable ECA and documented their plan, compliance with the remaining rules and principles should be effortless. Federal litigants must next make initial disclosures and report to the court pursuant to Rule 26. Parties should already be prepared for the required ESI disclosures and anticipate any potential disputes.

Seventh Circuit Principles 2.05 and 2.06 provide more detailed guidance on preparation for, and participation in, the Rule 26 conference with the court. The parties should discuss “methodologies” or a protocol for ESI discovery. The topics for discussion suggested by the principles include how to eliminate or avoid duplicative data, using filters and search methods to cull large data sets that may contain useless data, and a mutually compatible format for production. For example, the principles encourage the parties to confer on how to obtain information from databases, and whether or not to convert non-text-searchable documents into searchable. The principles also assign the costs of copies to the requesting party, but the costs of any upgrades (e.g., optical character recognition (OCR) processing) would be shared.

Again, there is a meet-and-confer element here prior to and during the Rule 16 conference. The Rule 16 scheduling order is typically drafted jointly by the parties. The court, absent substantial objections or inadequacies, will usually accept and enter the joint version. In a case that will involve even the smallest amount of ESI, a negotiated ESI protocol must be incorporated into the scheduling order. Precise documentation of the meet-and-confer sessions will save the parties from seeking judicial intervention and reduce costs.

e-Discovery Liaison

One notable problem routinely arises from the outset of the case. There is often a massive gap between understanding the legal requirements of ESI discovery and understanding the affiliated technologies. For example, legal counsel knows that ESI must be collected and preserved forensically to keep the chain of custody intact and avoid being accused of spoliation, whereas most IT personnel know how to collect data but perhaps not how to meet evidentiary standards.

The Seventh Circuit Principles recommend that each party designate someone to act as an “e-Discovery Liaison.” The liaison can assist in the ECA, the meet-and-confers, and even attend court hearings on ESI discovery issues. The designated person should be ready to help resolve discovery disputes, be able to testify to a party's ESI discovery efforts, have knowledge of and be able to explain a party's computer systems, and be capable of explaining the technical aspects of ESI discovery, such as data storage, formatting, and search and retrieval technologies.

The ideal e-discovery liaison, then, would have litigation experience and excellent technology skills. The principles state that the person can be in-house or outside counsel, an employee of a party, or a third-party consultant. Careful consideration should be given to the qualifications of the liaison and to how that person's time is best spent. For example, the rates of outside counsel and the economic costs of diverting in-house resources to litigation may not justify someone's role as e-discovery liaison.

Points to Remember

The Seventh Circuit Electronic Discovery Principles are the model for litigation cost-containment. Corporations struggling to manage litigation budgets will succeed in containing costs with these steps:

• Designate an e-discovery liaison with litigation and technology knowledge before the initial status conference with the court;
• Perform an early case assessment of ESI data, including relevancy of ESI to case issues, and a data-sources and -scope analysis;
• Prepare for and document the meet-and-confer process using the expertise of the e-discovery liaison;
• Consider automating the meet-and-confer process; and
• Act transparently through the initial disclosures phase and Rule 26 scheduling conference.

Ultimately, corporations will witness a reduction in costs associated with ESI discovery and more efficient resolution of their legal cases.

The costs associated with discovery in litigation have skyrocketed in the past decade, fueled in large part by the discovery of electronically stored information (ESI) or e-discovery.

Confusion over the technologies associated with e-discovery and inadequate assessments of a corporate litigant's relevant ESI have resulted in legal counsel's inability to resolve discovery disputes, accounting for a large portion of the increased costs.

ESI discovery disputes have become protracted for one common reason: The parties do not sufficiently prepare for ESI discovery. The causes for such lack of preparation are that most litigants wait for the document requests to be served before they conduct a search for responsive information and, therefore, they are not in a position to discuss ESI discovery (scope, format, cost, etc.) with their opponents. Frankly, the technology and amount of data overwhelm corporations and counsel alike. It need not be this way.

Corporations have had to become more strategic about how they handle litigation, especially during the discovery phase, in order to manage this increasing expense. Properly employing the Seventh Circuit Electronic Discovery Principles (http://1.usa.gov/yVv5L0), even if you're not in that jurisdiction, is one strategy that will help contain litigation costs.

'Meet-and-Confer' Requirement

Rule 37(a)(1) of the Federal Rules of Civil Procedure was added by amendment on July 1, 1970. It required that any motion to compel discovery “must include a certification that the movant has in good faith conferred or attempted to confer with the person or party failing to make disclosure or discovery in an effort to obtain it without court action.” Many states have adopted similar provisions (see, e.g., Ill.Sup.Ct.R. 201(k) (Reasonable Attempt to Resolve Differences Required)). Unfortunately, the so-called “meet-and-confer” rule has proved to be a well-intentioned, yet ill-fated, attempt to reduce the costs and animosity associated with discovery disputes.

The meet-and-confer requirement became more stringent over the last 10 years because of local rules that mandate that the conference be a face-to-face meeting or, at a minimum, via telephone conference (see, e.g., L.R. 37.2, U.S.D.C. N.D.Ill.). In fact, some magistrate judges, typically the individuals assigned to manage discovery in federal cases, have mandated that a letter precede the meet and confer, outlining all the disputes, the reasons the discovery is requested, and the legal basis or bases for turning the data over.

As awareness and use of e-discovery grew, failures in the meet-and-confer process increased in tandem. Parties elected either not to participate fully or at all. The excuse provided for such feigned participation was that the ESI discovery requested was overly broad and/or unduly burdensome. Often, ESI discovery requests were concealed in the discovery request's definition of “documents” or in catch-all verbiage of the requests themselves as counsel cast a wide ESI discovery net.

The truth, however, behind failed meet and confers lies within one or more of the following causes:

• Parties do not have a complete understanding of their responsive ESI universe (types and amount of data);
• Parties approach the meet-and-confer process with insufficient information or authority to resolve ESI discovery disputes;
• Parties lack the proper technology know-how or skills to perform an early assessment of their ESI (forensic collection and review); or
• Parties are de-incentivized to participate transparently in a discovery conference (economic and actual costs).

Because the meet-and-confer process is mandatory, breakdown creates inefficiency and increases litigation costs to parties. The parties also have made no progress in establishing a protocol for ESI discovery. This is a Petri dish for sanctions.

Seventh Circuit e-Discovery Pilot to the Rescue

The federal discovery rules “should be construed and administered to secure the just, speedy, and inexpensive determination of every action and proceeding.” (Fed.R.Civ.P. Rule 1.) Breakdowns in ESI discovery and the spirit of this rule are what, in May 2009, led U.S. District Chief Judge James Holderman of the Northern District of Illinois to form the Seventh Circuit Electronic Discovery Committee. The committee issued its guiding principles in August 2010 and began Phase I of implementation and testing of the program.

Three key components of these principles include: early case assessment and preservation; identification and discovery protocol of ESI; and use of an “e-discovery liaison.” The principles eventually made their way into a proposed standing order, which federal courts in Illinois, Indiana and Wisconsin could elect to adopt or suggest to litigants appearing before them. Many courts have adopted the standing order and/or the principles (see, e.g., Navigators Ins. Co. v. Freight Tec Management Group, Inc., 2011 U.S. Dist. LEXIS 105979 (U.S.D.C. E.D. Wis. Sept. 19, 2011; U.S. Dist. Judge Rudolph T. Randa); see also, Applications of Heraeus Kulzer, et al. v. Biomet, Inc., 633 F.3d 591 (7th Cir. Jan. 24, 2011) (Judge Posner “strongly recommend[ing use of the Seventh Circuit Principles] for any complex discovery proceeding”)).

Early Case Assessment/Preservation

Principle 2.01 suggests that, prior to the initial status conference with the court (Federal Rule 16), the parties should meet and discuss the anticipated ESI discovery they will need in the case. Specific focus should be given to identifying relevant ESI and development of a protocol for locating, preserving and managing costs of ESI discovery. Parties are encouraged to assess their respective clients' data before the meet-and-confer in order to be able to address any issues or discovery disputes that may subsequently arise, such as costs and format. This principle also enables the court to order more conferences, modify the discovery, or issue sanctions if one or more of the parties are not participating in good faith.

The purpose of the early case assessment (ECA) is to avoid waiting until discovery requests are served, which begins the ticking of the 30-day clock to provide responses. A defensible assessment of a party's ESI within that timeframe is nearly impossible for any sizable case. The principle suggests that a party (or counsel) should examine how its ESI is stored and retrieved, as that inquiry will highlight potential discovery issues, such as proprietary software and active databases. This can lead to a fruitful discussion about protective orders or on-site data reviews to protect the confidential information or trade secrets, yet still provide access to the evidence.

The timing of the ECA (before the initial status conference) is also critical. If a party or its counsel has not issued a “litigation hold” prior to that date, the ECA provides an unyielding trigger date for preservation of the data. This avoids potential spoliation of data, which can later result in severe sanctions to party and counsel.

Accurate documentation of the ECA and Rule 16 meet and confer process is vital. It provides a structure for ESI discovery throughout the remainder of the case as well as a valid report to the court. An encouraging trend is the automation of the meet and confer process, including preparation and outcome.

Identification and Protocol

If the parties have conducted a suitable ECA and documented their plan, compliance with the remaining rules and principles should be effortless. Federal litigants must next make initial disclosures and report to the court pursuant to Rule 26. Parties should already be prepared for the required ESI disclosures and anticipate any potential disputes.

Seventh Circuit Principles 2.05 and 2.06 provide more detailed guidance on preparation for, and participation in, the Rule 26 conference with the court. The parties should discuss “methodologies” or a protocol for ESI discovery. The topics for discussion suggested by the principles include how to eliminate or avoid duplicative data, using filters and search methods to cull large data sets that may contain useless data, and a mutually compatible format for production. For example, the principles encourage the parties to confer on how to obtain information from databases, and whether or not to convert non-text-searchable documents into searchable. The principles also assign the costs of copies to the requesting party, but the costs of any upgrades (e.g., optical character recognition (OCR) processing) would be shared.

Again, there is a meet-and-confer element here prior to and during the Rule 16 conference. The Rule 16 scheduling order is typically drafted jointly by the parties. The court, absent substantial objections or inadequacies, will usually accept and enter the joint version. In a case that will involve even the smallest amount of ESI, a negotiated ESI protocol must be incorporated into the scheduling order. Precise documentation of the meet-and-confer sessions will save the parties from seeking judicial intervention and reduce costs.

e-Discovery Liaison

One notable problem routinely arises from the outset of the case. There is often a massive gap between understanding the legal requirements of ESI discovery and understanding the affiliated technologies. For example, legal counsel knows that ESI must be collected and preserved forensically to keep the chain of custody intact and avoid being accused of spoliation, whereas most IT personnel know how to collect data but perhaps not how to meet evidentiary standards.

The Seventh Circuit Principles recommend that each party designate someone to act as an “e-Discovery Liaison.” The liaison can assist in the ECA, the meet-and-confers, and even attend court hearings on ESI discovery issues. The designated person should be ready to help resolve discovery disputes, be able to testify to a party's ESI discovery efforts, have knowledge of and be able to explain a party's computer systems, and be capable of explaining the technical aspects of ESI discovery, such as data storage, formatting, and search and retrieval technologies.

The ideal e-discovery liaison, then, would have litigation experience and excellent technology skills. The principles state that the person can be in-house or outside counsel, an employee of a party, or a third-party consultant. Careful consideration should be given to the qualifications of the liaison and to how that person's time is best spent. For example, the rates of outside counsel and the economic costs of diverting in-house resources to litigation may not justify someone's role as e-discovery liaison.

Points to Remember

The Seventh Circuit Electronic Discovery Principles are the model for litigation cost-containment. Corporations struggling to manage litigation budgets will succeed in containing costs with these steps:

• Designate an e-discovery liaison with litigation and technology knowledge before the initial status conference with the court;
• Perform an early case assessment of ESI data, including relevancy of ESI to case issues, and a data-sources and -scope analysis;
• Prepare for and document the meet-and-confer process using the expertise of the e-discovery liaison;
• Consider automating the meet-and-confer process; and
• Act transparently through the initial disclosures phase and Rule 26 scheduling conference.

Ultimately, corporations will witness a reduction in costs associated with ESI discovery and more efficient resolution of their legal cases.